If You Are Going To Work Short Sales... Know How To Get Paid.

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

http://shortsalesuperstars.com

Hi folks. Bob Hertzog started a good conversation earlier this week on his article....

Attn: Short Sale Listing Agents...READ YOUR LENDER APPROVAL LETTERS BEFORE CALLING ME WITH THE "GREAT NEWS"!!

Some how the comments made it around to commissions. One of the responders stated:

  • "...because it is the investor and/or pmi (mortgage insurance) who determines who gets what and how much."

And of course since this is dealing with Short Sales and how we get paid I just had to chime in.....

The above statement is not correct. Our listing agreement with the seller determines how much we get paid and how much of a co-broke we are offering selling agents. The listing agreement is between the seller and the broker. The lender/investor/sevicer/MI company (let's call them lender for simplicities sake) have ZERO say so in this agreement.

Based on contract law and and anti trust laws these entities CANNOT dictate how much I charge for my services. Commission is 100% between the seller and their broker.

This is a fact that agents need to understand.

Now having said that, the lender, can dictate how much of the commission they are willing to accept in their loss. Their loss is the portion of the commission that they will allow to be paid out of the proceeds of the sale. This however does not release the seller from paying  the commission as per the term of the listing agreement. We may choose to accept this as full compensation but it is our choice NOT the lenders. 

The seller can pay us additional compensation from their pocket NOT the lenders pocket. This can show up as a POC (paid outside of closing) on the HUD. The seller can also sign a note for the commission owed and pay it off over time. They can pay at time of listing***. The buyer can pay a portion of the commission on the HUD. There are many ways to get paid.

OR...we can choose to be at the mercy of the lender. Personally I choose to control my own business. I do not bend over for lenders just because they say this is how we are to do things. But of course this is just my opinion. What's yours?

***Please check your State's laws about advance fees and short sales.

Are you facing foreclosure in Florida?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

Want to find out more? www.CentralFloridaShortSales.com

***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas

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***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas

 

 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Gabe - Loss Mitigation Analyst - 12/29/2010 06:57 AM
Topic:
Real Estate Best Practices
Location:
Florida Osceola County Kissimmee Poinciana Estate
Groups:
Real Estate Rookie
Tags:
compensation
short sale

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Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Joe. I listened to the webinar and unfortuntely he didn't answer the questions I had submitted to him.

Which were:

  • If a seller signs a promissory note to his broker for a portion of the commission is this a respa concern?
  • If a junior lien is paid off prior to closing does it have to show on the HUD as a POC item? And if so what is the time frame that triggers whether or not it needs to be shown? For example if it's paid day before closing or 30 days prior.

What approach are you referring to?

He did talk about paying 2nds outside of closing and not placing this on the HUD. I agree with him there. A payment to a 2nd at closing needs to be on the HUD either as an expense or as a POC.

I wish he would have specifically answered my second question but he didn't.

He didn't mention anything about receiving a promissory note as commission. Although after listening to him I think the best practice would be to also place this on the HUD as a POC item.

He also didn't mention getting paid at time of listing. But I know this is not a HUD issue. It's payment for services rendered and is not contingent on the property selling and closing. Therefore it is not a RESPA issue.

So please clarify what you are referring to.

 

Jan 14, 2011 08:46 AM #98
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

And Joe just to get back on topic. This article was about getting paid. This is what I wrote:

  • The seller can pay us additional compensation from their pocket NOT the lenders pocket. This can show up as a POC (paid outside of closing) on the HUD. The seller can also sign a note for the commission owed and pay it off over time. They can pay at time of listing***. The buyer can pay a portion of the commission on the HUD. There are many ways to get paid.

I don't see anything in that statement that was discussed today as being against RESPA or being illegal.

The POC items came up in the discussion on this article and was exactly what was stated today in the webinar. Payments to the 2nd need to be on the HUD as a POC if not allowed to be paid by the investor. That was pretty straight forward.

 

Jan 14, 2011 08:54 AM #99
Anonymous
Joe Schleck

BB to answer your first questions and based on what Dr. Lacefield shared today the answer is NO you cannot receive any form of compensation outside of closing.

As far as the junior lien holder is concerned you are participating in a fraudulent activity period. Me think you like to dabble way too much in the grey areas.

Jan 14, 2011 09:10 AM #100
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

I'm done Joe. All agents need to seek legal advice and act acordingly. That's what I do.

We'll just have to disagree.

Jan 14, 2011 09:28 AM #101
Anonymous
Joe Schleck

BB that's fine with me but when it comes to legal matters there is no such thing as we have to disagree and leave it at that. There must be a good reason why the rest of our colleagues are abstaining from posting any more comments.

Jan 15, 2011 07:08 AM #102
Anonymous
Joe Schleck

BB I spoke to freddie mac and fannie mae over the phone concerning this hot topic of yours and guess what I have found out ?  You better post this on your superstar website..........................

Gabe is right on and so is Dr. Lacefield. They both have helped me understand the picture a bit more clearer so I can avoid these shady gray areas of negotiation.

I am so glad that I made that call. What now ?

Jan 17, 2011 10:23 AM #103
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

You're link is dead.

Jan 18, 2011 01:20 AM #104
Anonymous
Joe Schleck

BB so is this blog    :(

Jan 18, 2011 04:26 AM #105
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Joe I was refrerring to the underlined part of your last comment. I thought it was a link. if so it doesn't work It's dead. I would be interested in reading or listening to what fannie and freddie have to say.

Jan 18, 2011 05:51 AM #106
Anonymous
Joe Schleck

BB that was not a link to your website it was just underlined. I don't understand why freddie and fannie won't publish an article to dispel all this misunderstanding but I guess you will need to call them personally.

Jan 18, 2011 06:08 AM #107
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Joe. You need to also remember that not all loans involve fannie and freddie. And again fannie and freddie do NOT make law. They have guidelines. Guidelines can be negotiated. All of this gets down to negotiating.

I have spoken to fannie. I had direct communications with them on a recent short sale. We were able to remove a request for a $30,000 prom note that BofA had insisted needed to be agreed to or the short sale would be denied. We are closing next week with NO prom note. It's called negotiating.

We also just had a representative from HUD join our Short Sale Superstar site. I will see what I can do to procure an interview with him.

No matter what you may think I know what I'm talking about. I'm not just making this stuff up. Everything we do is above board and fully disclosed to the parties involved. If they don't agree with it then all they have to do is say no and be prepared to back it up with facts.

It is a shame that fannie or freddie won't put thsese things in writing. Maybe it's because the "rules" don't really exist. Could that be it?

Jan 18, 2011 06:46 AM #108
Anonymous
Joe Schleck

BB just like you I know what I'm talking about because I have spoken with them recently and I think it will be wiser to err on their side, of course one has to negotiate, negotiate but one also needs to cya, cya too.

Jan 18, 2011 07:28 AM #109
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

 

Here's the pretty much standard language in a BofA counter offer:

I just sent you a counter offer through the Equator system a few moments ago.  It's very important to accept or counter... Please DO NOT hit "reject" if you want to counter as this will close out the file and it will need to be re-opened at the first task... **** For future files, please make sure to enter ALL HUD1 fees onto the worksheet or they will not get paid/negotiated... I have done this for you ... Please use this as an example for future files…****
If a counter is presented and the buyer(s) will not come up to a full counter, please request a final and best… I have advised of the fees we will not pay for and those can be covered by another party… Any fees where the amount has been changed, the difference can be covered by another party as this is the max we will pay...

Please make sure you “OK” the Other Expense Amount Section notes and amount if filled in…

Thanks!

       *If possible, you should reply to this note through the Bank of America Short Sale System so your reply is delivered correctly and tracked. To reply, log in to the Bank of America Short Sale System and go to the Messages section.

Jan 18, 2011 09:45 AM #110
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

And again the servicer shows they have no problem with monies being paid that are not coming from the proceeds of the sale. This can be junior liens and/or commission. They can be paid as an expense above and beyond the proceeds (the seller brings money to closing) or they can be paid by the buyer or the agents at closing. Or even.......as POC on the HUD.

From Bank of America. Do you think the investor may have approved these approval letters? I do. And if not then that is certainly not the borrower or agent's issue.

***This may also vary depending on the lender/servicer/investor. Always seek legal adsvice.

www.CentralFloridaShortSales.com

Jan 21, 2011 05:32 AM #111
Rainmaker
1,516,122
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

I followed the link from your latest post and now...well I have got to come back here because there is a lot of discussion here!

Jan 22, 2011 01:35 AM #112
Rainmaker
493,316
Terry McCarley
REMAX Realty Team - Cape Coral FL - Cape Coral, FL
REALTOR, SRES, CDPE - Cape Coral, FL

Great information here Bryant - I agree with you 100% - our commission is determined by the listing agreement!

Apr 17, 2012 12:14 AM #113
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Bryant,

I think I understand why there has been such a brouhaha on this issue, so bear with me while I gather my thoughts.

As I understand it, a short sale is when the seller owes more on the property than what can be gained at the present time from a normal arms-length sale of the property.

While it is the lender who informs a seller and buyer of a decision to accept a short sale package, it is not necessarily the lender/servicer themselves making the decision, but the investors whose money was initially borrowed by the seller to purchase the property.

Thus, if investors are approving short sales, with stipulations as to how much of the commission they will allow to be paid from their loss, then it is clear to me that, if the balance of a commission is to be paid by a seller after closing (P.O.C.), then there is a reasonable expectation by the investor that the seller could have actually paid their loan obligation. This is why, if a POC shows up on the HUD-1, the investors whould reject the short sale package.

I will also say that Andi's statements provide a clear example of how short sales, and the laws that govern them, vary from state to state, so as it has been stated, we should consult an attorney first before proceeding.

Apr 17, 2012 01:40 AM #114
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

William. Some investors will have an issue with and some won't. Personally I feel no obligation to disclose to the lender that I am collecting commission after the sale UNLESS they make me sign something stating I won't. but yes all agents should seek legal advice in these matters.

Apr 17, 2012 06:49 AM #115
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Bryant,

What would worry me more is the seller not feeling well disposed about being required to pay any difference between what you legally signed on the listing agreement and any possible reduction in the amount of the commission being paid from the proceeds of the sale, even with a payment arrangement stretched over time. A broker can definitely get such an agreement in place; an agent, I am no so sure - the broker would have to agree to such an arrangement, I would imagine.

Apr 18, 2012 07:25 AM #116
Rainmaker
1,142,060
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

William. My sellers want me to get paid. In almost cases where I have collected additional commission from the seller it was because they asked me how they could pay me.

It's certainly more difficult for an agent to implement some of the things I do. It helps tp be the boss :)

Apr 18, 2012 08:55 PM #117
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